Brazil's Northeast is catching up as retail, services and tourism lead the way

Brazil’s ongoing economic strength is having a particularly favorable impact in its historically under-developed Northeast, which accounts for about 20% of the Brazilian landmass and is home to about 55 million people. President Lula has earmarked his home turf for aggressive investment, while a growing number of tourists are visiting the region's beaches and historic cities. This increased economic activity is showing up in services demand.

We've tracked the Northeast's outperformance by charting its retail sales strength against the Brazilian average and other regions through 2023-24. We calculated each region's retail volume index by averaging state-level indices, weighted by population for greater accuracy.

These figures and more can be explored in our Brazilian Northeast Dashboard at CEIC. In our second chart, we tap this granular, regional-level data to track the Northeast's nine states. Eight of them are posting retail strength that exceeds the national average.

Two of the most-visited states are Bahia and Ceará, which are experiencing impressive double-digit growth in tourism: in November, Bahia saw a 14.2% year-on-year increase in visitors, while the equivalent figure for Ceará grew by 17.7%.

Pernambuco, another key state in the region, has seen significant growth in services, particularly in information technology. The city of Recife is home to Porto Digital, a growing tech hub.

The success in retail, tourism and services contrast with more sluggish figures from the Northeast's manufacturing sector, whose growth trails the national average.

On the national level, Brazil’s economy grew at a 4% year-on-year pace in the third quarter; that growth is expected to have slowed slightly to 3.5% in Q4. This strength has been driven largely by domestic demand, supported by record-low unemployment of 6.1% and real incomes that reached a five-year high in November.

However, 2025 may see a further slowdown, with GDP growth expected to ease to 2%; stubborn inflation and last year's currency plunge could prompt the central bank to tighten policy – with a cooling effect on the hot Northeast.

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